A prenuptial agreement is an agreement between two people that deals with the finances in the event a marriage ends. It has traditionally been only for the wealthy but has gradually become more and more common among mainstream society.
The divorce rate in Canada is about 40% and even higher in the United States at 49%. This means that roughly half of all marriages in America will end in divorce – not great odds for someone looking to get married.
Here’s a quick look at the positives and negatives of a prenuptial agreement.
- It streamlines the legal process in the event of a marriage failure. Since everything is laid out beforehand, the legal process of getting divorced is usually done faster – and therefore cheaper. Less time is required by the lawyers because they simply have to follow what is in the agreement and very little is left up for debate.
- It can protect the assets in the case of a wealth discrepancy between the two individuals
- It can prevent your spouse from overturning your estate plan
- It can reduce the amount of alimony (payments made to the other spouse) in case of divorce
- It involves legal work and therefore lawyers – which aren’t cheap. There are standard forms you for those who wish to do it themselves but legal guidance in this case is highly recommended
- It can be offensive for the other partner if one partner wants to have one before getting married and could put a damper on the relationship
- It can lead to trust issues in a relationship if one partner brings up the topic before marriage
- Marriage has traditionally been a public display of love and commitment – a prenuptial agreement can make it seem like more of a ‘business deal’
Personally, we don’t have a prenuptial agreement as we didn’t see the need for one. We did discuss money in depth before marrying including how long a maternity leave will be, who will handle the money, whether we will have a joint bank account, spending habits and more. There was no wealth discrepancy when we married and we both had similar expectations for finances before marrying.
I think it’s important to discuss all these things before marrying to avoid any surprises, especially when it comes to finances.
Aside from children, prenuptial agreements can include anything. Just for fun here are some ridiculous clauses in prenuptial agreements that have come up:
- Tony Romo and Jessica Simpson had a clause stating that if she ever weighed more than 135 lbs during the marriage, she would have to pay him $500k. This was later dubbed the “porker clause”.
- Khloe Kardashian and Lamar Odom had a clause stating that upon divorce, Khloe would get the following: $500k for every year of marriage, $25K a month in support, their house, a new vehicle at the end of every lease cycle, $5K a month for shopping, $1K a month for beauty care, and season courtside Lakers tickets for her whole family
- Nicole Kidman insisted on a clause with her husband Keith Urban that he would get $640k for every year of marriage but if he ever used illegal drugs, he would get nothing
- Elin Nordegren was set to receive $20 million when she stayed married to Tiger Woods for 10 years. When they split in 2009 after his alleged transgressions, she reportedly received $100 million.
Conclusion: prenuptial agreements have a negative reputation but can be useful for some couples. In the event of a wealth discrepancy or a second marriage some feel the need to protect the assets they have before marrying.
What do you think? Are pre-nuptial agreements necessary?